Andrew Gould, Chairman and CEO of Schlumberger Ltd.

07 March 2005

The Way Ahead Interview invites senior figures who shape our E&P industry to share their wisdom, experience, and deep knowledge with the young E&P professional community. Each interview will bean open conversation that explores the careers, advice, and vision of these successful individuals.

The interview aims to uncover lessons learned from the wide perspectives of these prominent leaders. Upcoming interviews will include conversations with senior figures from government, the E&P industry, professional bodies, international organizations, and other entities that contribute to the oil and gas industry’s future.

Each interview will reveal new insights and valuable lessons. It is hoped that these interviews will help young E&P professionals learn how to nurture their own personal skills, understand the nature and challenges of our industry, and grasp the technologies, developments, and issues that are key to creating our industry future.

The Way Ahead thanks all of our interviewees for their generosity and candid discussion, and for investing personally in helping to show young professionals that there is a rewarding career ahead in a continuously improving, exciting, challenging, and vital global industry. We also express sincere thanks to those who selflessly share their time and sponsorship to assist in organizing each interview.

Our first interview takes us to Paris on a beautiful autumn day, within view of the River Seine and the Eiffel Tower. Please enjoy reading this fascinating interview with Andrew Gould and learn from his career experiences and discerning comments.—John MacArthur

What in your early life led you to choose a career in the E&P industry?

During my early life, I spent many years living around the world in places like Africa and the Middle East. I have always loved to trav- el. So I did not so much choose the E&P industry as much as I chose to travel. Indeed, I first came to Paris working with another company, and then later moved to Schlumberger.

What was your first job in the E&P industry, and what was your impression of the industry when you first joined? How has your view of the industry changed?

Schlumberger gave me the opportunity to travel right from the start. I was in Caracas on the Monday and Tuesday of my first week. This was followed by 10 days in Brazil. I was perhaps atypical, as an accountant in an industry dominated by engineers. During my first 12 years, I concentrated on financial roles before I moved into a general management role running our Sedco Forex business. My first impression, wherever I went, was that there was an exciting atmosphere with great people in our industry. That impression has never changed.

What are the most memorable experiences in your career since?

I was faced with a challenging experience soon after I started at Sedco Forex. We had three rigs adrift in the North Sea, and the weather was so bad that we could not get lines onto them. Together the team found a solution, and we resolved the situation safely. Safety is always of paramount concern.

Another experience changed my attitude regarding security. In October 1994, terrorists in Algeria executed two Schlumberger employees. People died, but not as the result of an accident. I will never forget that feeling. That experience influenced my view on security long before events we see around the world today. Personally, I believe it is my role and that of management to govern so that safety and security are given highest priority.

What advice would you give to professionals in the early stages of their E&P careers?

My advice is to stay in a technical role much longer. This is a technical industry, and the more technical experience young professionals get early in their career, the more it helps them later. Quite a few people choose to do an advanced degree like an MBA because they think this is important for management opportunities later in their careers. Instead, I would encourage those people to take an advanced technical degree because business skills are easier to pick up than engineering expertise. For a technical industry like ours, it is vital that we continue to strengthen our technical culture.

Who has helped you the most in your career, and what lessons did you learn from your mentors?

Schlumberger has an absolute commitment to mentoring. Technical mentoring is one aspect. Another aspect is sharing the ethics and diversity that we live by—the core fiber of Schlumberger. Diversity means ensuring that everyone has the same opportunity. As you move up in the E&P industry, the ability to succeed in communicating with people becomes increasingly prominent. Even a step from working with two people testing wells moving to supervising a logging truck with five engineers tests our communication skills. Mentors can help us learn how to work with people. This is absolutely fundamental. Personally, I learned how to get things done by valuing the honest and direct feedback I was given from mentors and others.

What issues do you care most about in your work and your life? With these in mind, what advice would you give young E&P professionals?

We must always appreciate the essential support we get from our partners and families. I also have a personal belief in education. If I were to retire from Schlumberger, I would find a way to be involved in education. My advice to young professionals is that they must be passionate about the E&P industry. I have the E&P bug, and you can get the virus in many ways. But you have to have it.

Many young professionals start their careers in nonengineering roles as you did. What advice would you give them?

I remember believing that scientists and engineers had precise answers for everything. My huge discovery later was that they have rules for defining uncertainties and ranges of possibilities, but that finite answers are difficult for engineers to provide. Nature and wells do not work that way. This helped me to understand how we could work together and communicate most effectively.

What are the key technology challenges you see for the E&P industry now and in the next 10 years? What can young E&P professionals do to help?

In the 1970s and 1980s, everyone thought that 3D seismic was significant. But no one could tell you what would be the next great technology. Today, we have 4D permanent sensors, but it is impossible to say if that is the next great technology. What we can say is that there are options, and Schlumberger is pursuing them. Young professionals can help. Their huge advantage is that they do not carry 30 years of baggage. They have a duty and a right to challenge conventional wisdom. We encourage active participation and want people keen to contribute and keen to challenge.

The root of your innovative culture sounds behavioral. How do you achieve that?

It is about choosing the right leaders. We make sure that we choose leaders who encourage participation and challenge. As a result, for example, we have a new seismic technology that uses a single sensor. This means a multitude more data in a single sensor, and we could not afford to go back to the days when it took a year to turn around data. We insisted on rapid turnaround, challenged conventional wisdom, and came up with a solution. This culture has been developed over time. Ten years ago, we realized that military-specification electronics for our downhole tools were too expensive, and we scoured the world to find another solution. We discovered that the technology used in cars also handled the same kind of temperatures our customers required. I encourage young professionals to push their contribution to these types of efforts.

What other challenges are there? What is on the horizon? How should young E&P professionals prepare?

First, I would advise young professionals to learn Russian, Chinese, and Arabic. Second, they should learn about new technology, particularly for tight gas, coalbed methane, and heavy-oil extraction. These sources of hydrocarbons cannot be ignored, and there is huge opportunity for young professionals to become experts in these areas. Third, the environment is a worthwhile challenge either through controlling emissions or safe sequestration of carbon dioxide underground. We need to show people sequestration is safe and give technical reassurance. I recall that the nuclear industry failed to get sup- port for “burying” spent fuel. That language was negative; burying has negative associations and sounds like it is temporary. In E&P, we need to avoid such mistakes. We must be proactive and openly discuss environmental and safety issues.

How is Schlumberger dealing with the issue of aging work forces in traditional recruitment areas, the so-called “big crew change”? What can young E&P professionals do to help companies access the talent needed?

Many young people think we are in a dying industry. Young professionals in the E&P industry can change that perception. Just the other day, I was talking to a retired engineer who told me that when he joined the industry in 1950, people said there were only 20 years of oil left. Our industry helps the world to grow and benefits every area of life. Everyone working today will be able to retire long before

hydrocarbons run out. When we recruit at universities, we send our best people with 3–5 years of experience. They are proud of what they do and believe in the industry. They know the students, they know the professors, and they get the right messages across with credibility.

The aging work force is a Western phenomenon. Since the 1970s, the number of petroleum engineering graduates has halved. Schlumberger has been active hiring from talent pools in other parts of the world for 30 years. We hire more people in Russia and China than we do in Western countries. The industry needs to adjust to that balance. Overall, wherever we operate, a conscious effort is needed to nourish the science and engineering education base.

What three changes would you make to the way our E&P industry develops people?

First, I think the industry focused on cost cutting after the 1986 price collapse. This caused a massive attrition in technical staff numbers. The industry does not value

technical careers as it did in the 1960s or 1970s. We need to revalue technical careers and offer as good a future as any other option.

Second, raw computing power has transformed the way we can bring people together to build a better picture of fields, wells, and facilities. This means that teams need to understand all parts of the picture together. You cannot be just a geophysicist any more. To be a successful geophysicist, you need to understand geology, petro- physics, reservoir engineering, and other skills. The industry needs to promote interdisciplinary training and understanding.

Third, the Society of Petroleum Engineers makes a valuable contribution to continuing education and knowledge sharing in a world where technology moves lightning fast. SPE has recognized the need for an interdisciplinary approach and works closely with other technical societies. They also support knowledge sharing and electronic dissemination. These are vital skills for the E&P professional of tomorrow. The industry needs to recognize the value of involvement in SPE activities.

How do you see the balance between local and international careers compared to your early career? What advice do you have for young E&P professionals when they get the opportunity to travel or work abroad?

When I joined the industry, there was a very big push on exploration and production. Mobility was high, and we followed the drill bit around the world. We moved anywhere, anytime, and there was little choice. Today, there is a greater focus on production, and this brings more stability. Perhaps volatility in mobility is less than before, and the number of people moving internationally will reduce.

I recommend traveling and working abroad. You profit most if you learn the language and get involved with the local culture. Another great advantage in moving is that no two reservoirs are the same, and learning about these differences is a large part of the technical culture.

What do you miss when you are away from home?

I miss my wife and kids, but I have learned how to spend quality time with them. I plan time at home and leave the work in the office. My advice is to stay fully involved with family life and take proper vacations. But it would be wrong to pretend that it is easy. There are sacrifices if you want to move up.

This is a challenge for any couple. In addition, we are seeing another characteristic emerge today—that of dual careers. This adds complications, and the industry needs to continue to adapt to these changes.

How did you get involved in SPE? What has your SPE membership meant to you?

I got involved in SPE very late. SPE is a vibrant technical community, and this is of huge value to me. The membership is now truly international, and there is an enormous effort to sustain sharing of technology and foresight. SPE is a very important part of professional life, and it is also fun. Schlumberger gets invaluable returns for our investments in SPE through education, which should not only be inward; through creation of technical dialogue; and SPE also serves as a barometer of hot technology topics.

You have a very busy professional life, but what do you do to relax? What is your ideal escape?

I try to keep fit by walking the 25 minutes from my home to the office as often as I can. That really helps to clear my mind. I also like to go fly fishing, but please don’t tell anyone I am some kind of professional master! I do catch salmon from time to time. I find standing in a river on my own helps me think extremely well and relax. Imposed solitude is a good escape.

Finally, what would you say if you had to give a brief speech to young E&P professionals about the attractions of the industry, and specifically the service company world?

In our industry, you will work in a fast-changing environment, and you will never be bored. There is an international culture in an international industry.

The service industry is all about great people. Our processes and technology are important, but you can tell in 20 minutes if the service or safety is right by talking to the people. We are in an industry where the people really count.

If we look back to how our company started, the Schlumberger brothers invented a technology and succeeded in creating a great service for our customers. That is still very much central to all that we do.

Andrew Gould is Chairman and CEO of Schlumberger Ltd. Founded in 1927, the company employs more than 50,000 people of more than 140 nationalities working in 100 countries. Revenue was U.S. $10.1 billion in 2003.

Before assuming his current role in February 2003, Gould was President and Chief Operating Officer of Schlumberger Ltd. Before that appointment, he held the position of Executive Vice President, Schlumberger Oilfield Services. In earlier assignments, he was Treasurer of Schlumberger Ltd. and President of Sedco Forex, Wireline & Testing, and Oilfield Services Products. He started his career at Schlumberger in 1975 in the company’s internal audit department in Paris. Before joining Schlumberger, he worked for Ernst & Young.

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